Why Frugality is Liberating and How You can Downsize Your Financial Stress 

There’s no doubt that issues involving money cause significant stress in our lives. A 2007 study by the American Psychological Association showed 73 percent of Americans consider money a significant source of stress in their lives. Another study conducted by the Associated Press and AOL indicated a 14 percent increase in money stress from 2004 to 2008. So, why are we so stressed out?

Student loan debt and credit card, two possibly significant factors, are at an all-time high. Also, the 2008 recession wiped out or impacted the retirement accounts of millions of people, leaving them wondering if they have enough money to survive their later years. Surely, there must be an answer to all this pressure we’re feeling!

There is: frugality. Though people often confuse “frugal” with “cheap,” it has a pretty straightforward definition: “careful about spending money or using things when you do not need to; using money or supplies in a very careful way.” Essentially, it means to not spend money you don’t have, something Americans, who combined owe over $850 BILLION in credit card debt, are not good at.

Imagine a life with fewer bills, harassing collection calls or credit card companies requesting payment. Wouldn’t that be less stressful? Living frugally means living within your means. You’re not chained to credit card companies, a bank or your parents. It creates greater independence and can even be (dare we say it?) fun.

So, how can I live frugally?

There are many ways, but budgeting and saving 10-20 percent of your paycheck is a great place to start. Bored? Stop browsing online shopping sites and go for a walk or head to the library to get a good book. You can also get creative: one mom realized she was wasting too much food every week, so she began taking pictures of all the food she threw away to motivate herself to shop smarter.

If you ask yourself, “Do I really need this?” before making a purchase, you’ll make smarter decisions, save more money, have less debt and live a generally happier life.

How can you life frugally? Lincoln Savings Bank challenges you to find the innovative ways to use your money a little smarter and stretch your dollars just a bit further. You can always turn to LSB and we’ll see if there’s anything we can do to help!

Lincoln Savings Bank, Member FDIC

Lincoln Savings Bank (LSB) is excited to announce a newly designed website will be launching on November 20, 2012. The new site design provides a fresh look and leverages technology called “Responsive Design”.  In short, it means that all visitors to www.mylsb.com will enjoy a consistent, optimized experience whether they are visiting from a desktop computer, a tablet or mobile device.  The image above is a representation of how the new homepage will look to visitors to www.mylsb.com

LSB partnered with Cedar Falls-based Spinutech to create the new, cutting-edge bank website.  Spinutech is an Iowa-based web design and web development company that specializes in delivering Internet solutions that meet and exceed the specific needs of their customers.

Angela Evans, LSB’s Digital Marketing Specialist, notes that “we’re far beyond the days of creating static websites.  Our clients increasingly expect their local community bank to offer the features and functionality once available only from much larger institutions.  Our aim is to develop a user experience that is independent of screen size or device, and do so in a manner that carries with it our unique brand of community banking.”

We’ve talked before about IRAs and needing the right amount of money saved for retirement. However, there are other reasons to have an IRA, but especially a Roth IRA. Why a Roth IRA? Here are a few reasons: 

Compound interest- like other IRAs, Roths allow your money to grow with compound interest. This is important because there are…

No age limits- you can open a Roth IRA whether you’re 16 or 36; you just need earned income. The younger you open an account and start saving, the longer your balance grows with compound interest, which is a good thing for you.

TAX-FREE contribution withdrawals- this gives you flexibility for emergencies when you may need extra cash on hand. The catch here is that you can only withdraw contributions tax-free, not earnings. And while we don’t advocate spending money meant for retirement, it does work as a financial backstop.

Generally tax-free withdrawals in retirement- traditional IRAs tax retirement withdrawals in your top tax bracket, whereas Roth IRA withdrawals are mostly tax-free. Assuming tax rates will continue to rise in the future, it’s better to pay your taxes now than later.

It can help you buy a home- an added perk of Roth IRAs: once the account has been open for 5 years you can withdraw all contributions plus up to $10,000 in earnings penalty and tax-free to purchase your first home. Again, Lincoln Savings Bank isn’t big on dipping into retirement savings, but it’s nice to know that option is available.

Better contribution for flexibility- procrastinators rejoice! With Roth IRAs, you get a 16-month time period to contribute to the account. So, if you started funding a Roth IRA back in May of this year, you have up until Tax Day in April of 2014 to reach your $5,000 contribution limit for 2013, while 401(k)s and other retirement accounts end on Dec. 31.

More investment choices- most Roth IRA options have more investment options than a 401(k). This means you can create a more diversified portfolio for safer investing.

There’s no limit on your account growth- 401(k)s and traditional IRAs require you to begin minimum distributions at age 70 ½; with Roth IRAs you’re never forced to withdraw your money. If you don’t need your money, continue to let it grow until you do.

Roth IRAs can be passed on- account funds can be passed on to heirs after you die, which they receive annually or in a lump sum tax free. Traditional IRAs and 401(k)s can also be passed on, but their funds will be taxed.

While Roth IRAs tend to be better suited for younger workers, a Lincoln Savings Bank financial planner can help you decide which retirement option is best for you. Just give your nearest LSB branch a call to get started today!

Can you separate a bargain from a trap? Take the quiz to find out!

 The holiday shopping season is approaching, so it’s time to prepare yourself financially and mentally for the stress of parting with your hard earned money. Millions of shoppers will flock to stores on Black Friday this year, and millions more will search for hot deals online come Cyber Monday. However, they may be unaware of the traps being laid for them by retailers with their flashy signs and ads for “special deals.” 

Don't get suckered into a trap while you're out shopping
this holiday season!

This raises the question: how savvy a shopper are you?

The following questions will test all aspects of consumer intelligence. Let’s get started:

Would you like to open an ABC Store credit card to save 15% on today’s purchase?: bargain or trap?
Joining an auto club, like AAA: bargain or trap?
Using tax software to prepare your tax return: bargain or trap?
Paying for a copy of your credit report: bargain or trap?
Using a no-contract cell phone service: bargain or trap?
Getting vitamins or medications at the dollar store: bargain or trap?
Going shopping at outlet stores for brand name clothing: bargain or trap?
Providing your email address to receive email discounts: bargain or trap?
Buying long-term care insurance: bargain or trap?
Taking out a payday loan to pay for immediate purchases: bargain or trap?

Check your answers with the correct ones below. How well did you do? If you got 8-10 questions right, you’re consumer intelligence IQ is off the charts; 6-7 correct, you do pretty well when shopping; 5 or less correct, you’ve likely been wasting money on your shopping trips.

These questions were designed to see if you could identify when a purchase was smart or a waste of money, a lifetime skill that can end up saving you a good amount of money over time. Lincoln Savings Bank hopes everyone shops with these tips in mind for a better, less stressful holiday season. Good luck, everyone!

Lincoln Savings Bank, Member FDIC

Answers: 

1. trap 2. bargain 3. bargain 4. trap 5. bargain 6. trap 7. bargain 8. bargain 9. bargain 10. trap

Despite all the bad things we hear on the news every night about our economy or how much credit card debt our nation has racked up, many of us still can’t resist a good sale. Black Friday, the day after Thanksgiving filled with massive sales from retailers nationwide, has actually become more popular since 2008.  Almost 250 million people visit stores on Black Friday with another 129 million shopping online on Cyber Monday.

We can't help with the crowds, but using these tips can help
bring a little sanity to your Black Friday

These big sale days are actually a great time to get holiday shopping done or at least started, but how do you resist the temptation to buy more than you should?

One word: BUDGET.

Here are a few savings strategies for those committed Black Friday shoppers this year:

• Find savings before hitting the store- sit down with a newspaper, look at deals on the “official” Black Friday website or even download a Black Friday app!
• Compare ads- the first price you find for an item may not be the lowest, so be sure to peruse the ads for lower prices.
• Make a specific list for each store- find what you want and buy ONLY those gifts.
• Set a budgeted amount for each person- use their wish list and research how much the items cost. 
• Use cash- if you absolutely can’t resist the urge to overspend despite doing all the above strategies, use cash.  Figure out the total amount you want to spend, get that amount in cash, and leave your debit or credit card at home to avoid going over the limit.

If you’re a serious Black Friday shopper, what strategies have you employed for successful savings? Hopefully whichever strategy you use will help you to spend smarter and actually save money that could go toward something more important like food or supplies for your favorite charity or non-profit (it is the season for giving and being thankful after all).

Most importantly, Lincoln Savings Bank wants you to stay safe this Black Friday. Drive carefully, park in well lit and populated areas and don’t leave purchased items in plain sight in your vehicle. We hope all goes well and look forward to seeing you soon!

Lincoln Savings Bank, Member FDIC

There may come a time in your life where you really just need cash for something. Maybe it’s to fulfill a lifelong dream, fund a wedding, make emergency repairs to a home or vehicle, or perhaps take a two-week vacation to Tahiti. Whatever it is, you may not have saved enough and now need to borrow. So, what are your options? 

Personal loans are great because than can be used for
nearly anything, but must be used responsibly.

In recent years, people have been turning to short-term personal loans for everything from vacations and RVs to loan consolidation and home improvements. Personal loans can be used for almost anything. But, just because you “can” doesn’t necessarily mean you “should.”

Personal loans come with higher interest rates, meaning a higher overall cost to you.  The interest on personal loans is also not tax deductible since they are unsecured loans.  That means you need to keep a few things in mind before you sign for that loan:

• Does taking out this loan fit in with your financial priorities and goals?
• Could you continue saving instead of taking out the loan?
• Will you be able to afford the monthly payments?

While we can’t provide financial advice tailored specifically to you in this blog post, here’s what we would recommend as far as using a personal loan is concerned:

• Make sure it furthers a goal or helps you achieve a goal of some kind. For example, if you need to improve or fix your home and a home equity loan isn’t an option, a personal loan may be the best alternative.
• Have a repayment plan in place. Most people repay a personal loan in 12-18 months. Be sure to have a solid plan in place, and know you’ll have to adjust spending in other parts of your budget to accommodate loan payments.
• Be smart. Sure, a new RV or camper would open all sorts of doors to fun adventures. However, it’s not worth piling up debt you can’t afford. Hold off and save until the time is right.

Loans can be complicated, so if you need help understanding them or if you’re questioning whether a personal loan is right for you, Lincoln Savings Bank can help you sort everything out. We look forward to talking with you soon!

Budgeting, Saving and Spending Habits are Some of the Lessons Learned

In our last blog post we talked a little bit about the severe lack of financial literacy in the United States and offered a quiz for you to see where you fell on the scale. If you got less than half the questions incorrect, don’t feel too bad: in a 2008 nationwide financial survey, high school seniors answered less than half the questions correctly. 

Basic finance is an important life skill that should be taught
at a younger age to help build good habits.

It’s been proven in numerous studies that kids who are taught how to manage their finances at an early age have better money habits throughout their lives than those who don’t. However, is personal finance something that should be required in schools around the country? There are pros and cons to requiring personal finance classes:

Pros of Personal Finance Education

·         You’re more likely: to save money, use a budget, invest wisely, acquire less debt and pay off debt easier

Cons of Personal Finance Education

·         Additional costs for teachers and materials

·         Can’t ensure follow through or personal responsibility

The ultimate argument against requiring finance education courses is the 2008 recession. But could the recession have been prevented if finance courses had been required 20 years ago?  Oddly enough, a 2013 study by investment giant Fidelity showed that since the 2008 recession there has been in an increase in savings, retirement and emergency fund contributions. Perhaps we need a little pain to motivate us.

Still, Americans owe over $850 billion in credit card debt, 55 percent of U.S. adults spend equal to or more than their income and over half U.S. adults don’t use a budget. These problems can be solved by providing basic lessons in budgeting, saving and spending money wisely to reach goals. Requiring a semester-long personal finance to help students learn these things is not unreasonable.

As a community-focused bank, Lincoln Savings Bank wants our customers to make informed financial decisions. That’s why we offer the LSBPlus program for financial guidance and will gladly speak with you if you wish to know more about a certain topic. Together we can help each other make responsible financial decisions for a more financially stable future.

Lincoln Savings Bank, Member FDIC